Bengaluru: Online retailer Purplle plans to open more offline stores this year as it negotiates with Abu Dhabi Investment Authority (ADIA) for a $100 million investment, according to two people familiar with the developments. This investment would largely be through a secondary transaction in which some early investors would exit, they said.
The valuation that Purplle is seeking is not yet known. The investment is expected to take place in the coming months and may be a part of the company’s pre-IPO round, one of the people said. CEO Manish Taneja said Purplle plans to tap the public markets between the second half of next year and early 2026 but is in no hurry to do so.
Purplle declined to comment on the proposed investment, while ADIA did not immediately respond to Mint’s queries
If the deal goes through it will be ADIA’s second investment in the startup in 12 months. It previously invested $50-60 million in Purplle in May 2023 at a valuation of $1.1 billion. That was the same valuation Purplle commanded in its funding round in June 2022, in which Paramark Ventures invested $33 million. The company has so far raised $387 million across 16 rounds, according to data from Tracxn. Its other investors include Peak XV Partners, Blume Ventures and Premji Invest.
Offline push
The company’s offline push is due to increased spending on beauty products and a growing preference for hybrid shopping, Purplle’s chief executive Manish Taneja told Mint. The company, which has just two offline stores, plans to open 5-10 more in the next few months, he added.
India’s young, growing population, higher disposable incomes and increased penetration of mobile phones fuelled online consumption during the heights of the pandemic. But over the past two years consumers have been seeking offline touchpoints for their purchases as they have gradually returned to pre-pandemic lifestyles.
This has caused several online beauty and personal care companies such as Nykaa and Mamaearth – and now Purplle – to look at increasing their offline presence.
In February, Mamaearth’s co-founder Ghazal Alagh said the company would continue to strengthen and expand its omni-channel distribution with about 1.7 lakh retail touchpoints, and increase distribution by 37% year-on-year. The company also has a partnership with Purplle and other players to address the tier-2 and tier-3 segments. Nykaa, meanwhile, had about 150 stores as of FY23 compared to 72 stores two years prior, according to media reports.
That said, Purplle’s focus will remain online, from where it earns about 99% of its revenue, Taneja said. “I would say starting our own stores is probably at an experimental stage. We will see how it plays out,” he added. Stocking inventory for offline is “very different” from online, and the company needed to keep profitability in mind, he said. “We need to learn the ways of running an offline business and set up the process. Once we are comfortable with that and we know how to make it profitable, we will expand further,” he added.
Playing catch-up
But with high gross margins and recent claims of profitability, the company now needs to play catch-up in the offline space as consumption is slowly moving back that way, one of the people cited above said.
Purplle saw its total income more than double to ₹508.6 crore in FY23 while losses widened 13% to ₹230 crore, according to the company’s latest filings sourced from Tofler. The company claims to have been profitable in the past two quarters but has not disclosed any figures.
Lowering marketing spends and logistics costs has contributed much of the company’s growth and profitability of late, Taneja said. “We have moved closer and closer to our customers. We try to ship products from the nearest warehouse and that reduces our logistics cost. so that is a big direct cost that comes down,” he added. Although it continues to spend on acquiring new users, it receives more than 75% of its revenue from repeat customers, he added.
Purplle has also expedited its growth through a couple of acquisitions in the past few years. The company acquired cosmetics and skincare brand Faces Canada in December 2021 to get more private labels on its platform. It has also acquired content company Glamrs and female-hygiene brand Carmesi.
While the company has no plans for more acquisitions, industry watchers have said there is scope of consolidation in the industry. Market-research firm Statista estimates that India’s beauty & personal care will generate revenues of $31.51 billion in 2024 and grow at 3% a year until 2028.
Founded in 2012 by Taneja and Rahul Dash, Purplle sells a wide range of beauty and personal care products, typically catering to households with an annual income of ₹5 -30 lakh. Most of its target market is in tier-2 and tier-3 towns and it gets about half its revenue from more than 78 cities such as Mysore, Coimbatore, Kochi, Ernakulam, Kozhikode and Siliguri.